Differentiation between commodities driven by the extent of supply constraints that will likely drive greater price dispersion across the commodity complex;

Resource realignment as emerging markets are forced to bid away scarce commodities from the developed economies, especially when supply constraints are more restrictive, which shifts the focus away from the sustainability of higher prices and towards the sustainability of higher growth;

Increasing macroeconomic correlations as resource realignment will likely increase the relevance of commodity prices and supply to the broader macroeconomic environment.

Rev Shark: The Trend Is Your Friend ... Until It's Not12/04/2009 8:11 AMYou may be deceived if you trust too much, but you will live in torment if you don't trust enough.-- Frank Crane

As the year winds down, market players are wondering whether they can trust this market to keep on running. We have been going almost straight up since March, and now we are in the seasonally strongest time of the year, with many money managers trying to gain some relative performance. Is now the time to start worrying about the health of the market and to start anticipating a pullback?

What has been so remarkable is that despite the gloom of high unemployment and the tepid economic recovery on Main Street, the stock market just keeps on chugging higher. So many market players think it is just a matter of time before the market returns to reality and starts to struggle.

The bears have been underestimating how powerful the forces of 0% interest rates and high liquidity are. It is impossible to generate yield on idle cash, and all that money from bailouts and stimulus has to go somewhere ... so what better place than the stock markets?

It is very easy to underestimate those forces, especially since they are unaffected by all the fundamental bearish arguments. As long as stocks continue to act well, all the talk about the problems we will surely face down the road is irrelevant.

I've always tried not to over-anticipate a change in trend. The biggest mistake that many investors make is that they start anticipating that the market will change direction way too early. We always think the market is going to share our opinion of what is reasonable and will stop moving in just one direction, but the market often goes further than we think is reasonable or realistic.

While we should always give the benefit of doubt to the prevailing trend, that doesn't mean we should be oblivious to warning signs. In my trading, the foremost warning sign that I pay attention to is the condition of individual stock charts. If I'm not finding charts I like, then I automatically become more cautious, because I put less money to work. If the market is narrow like this one has been, there will automatically be fewer stocks to choose from. That forces me to be more cautious even when the indices are still in pretty good technical shape.

Other things like weakness in financials and underperformance of small-caps will also automatically force you to be more cautious because the charts simply won't be very inviting.

A lot of folks have been having great difficulty trusting this market all year, and that is going to continue to be the case for a long time. But as we've seen, that doesn't mean the market can't keep on running. The important thing is to let the charts be your guide -- when more and more individual stocks look poor, the more cautious we will be. That might not get you out at the precise top in the market, but you will more likely avoid being too cautious too early.

We have the jobs report coming up at 8:30 a.m. EST, which is going to set the tone for today. Bank of America (BAC - commentary - Trade Now) priced its secondary offering at $15 and it is trading up from there about 30 cents. It isn't a great response, but the deal is done and we'll have to watch to see if BAC continues to hold that pricing.

I'm a bit concerned about this market because of how narrow it has been lately. I still see some good trading in some small areas like China, but the reaction to the jobs news today is going to tell us some important things about this market.